Jones Soda Co. Announces Second Quarter Fiscal 2007 Financial Results

SEATTLE–(BUSINESS WIRE)–Jones Soda Co. (the Company or Jones) today announced financial results for the second quarter ended June 30, 2007.

Second Quarter Review

  • Total case sales of 1,722,795 cases (288 ounce equivalent) compared to 961,000 cases a year ago
  • Revenue increased 29.8% to $13.0 million compared to $10.0 million a year ago
  • Gross margin decreased to 34.2% versus 38.0% last year
  • Diluted earnings per share were $0.00 compared to $0.10 a year ago

Peter van Stolk, President and CEO stated, Although our second quarter revenues increased by approximately 30% driven by a double digit sales gain in our core bottle business, our concentrate sales were below plan due to some delays in the launch of our CSD product which negatively impacted our gross margin and profitability. While we are disappointed in the initial rollout of our Jones Soda cans we are focused on better managing our CSD manufacturing and distribution process and we remain optimistic about the many long-term growth prospects of this business.

Revenue for the second quarter of 2007 increased 29.8% to $13.0 million compared to $10.0 million in the second quarter of 2006. Gross margin for the second quarter decreased to 34.2% versus 38.0% in the second quarter of the prior year. Operating expenses as a percentage of sales for the second quarter increased to 38.4% from 31.1% in the corresponding period in the prior year. The company reported net income of $40,726, or $0.00 per diluted share, compared to net income of $2.3 million, or $0.10 in the second quarter ended June 30, 2006.

We are pleased to have secured distribution in more than 15,000 new retail locations in a relatively short period of time. Importantly, these new relationships have resulted in increased distribution for our bottles, including shelf space at Wal-Mart and Sams Clubs, which contributed to the segments recent strong performance, Mr. van Stolk commented. Looking ahead, we are committed to improving the execution of our CSD business across the board. At the same time, we are in the process of building a stronger organization that will ensure we are well positioned to capitalize on the many growth opportunities that we believe exist for our expanding portfolio of brands and products. We remain confident in our ability to capture meaningful market share of the $70 billion carbonated soft drink industry and to drive increased profitability in the years ahead.

About Jones Soda Co.

Headquartered in Seattle, Washington, Jones Soda Co. manufactures its Jones Soda, Jones Pure Cane Soda, Jones Energy, Jones Organics, Jones Naturals, Jones 24C and Whoopass brands and sells through its distribution network in select markets across North America. A leader in the premium soda category, Jones is known for its innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers and everywhere youd never expect to find a soda.

This press release contains forward-looking statements and projections concerning the Companys plans, strategies, expectations, predictions and financial projections concerning the Companys future activities and results of operations and other future events or conditions, and are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipate, may, will, plan, intend, estimate, could, and other similar expressions are intended to identify these forward-looking statements. In particular, statements in this release regarding potential growth opportunities, working capital and cash flow management, operational and expense controls, future profitability and results of operations are forward looking. Statements in this press release, and elsewhere, that look forward in time or include anything other than historical information involve risks and uncertainties that may affect the Companys actual results of operations. These statements by the Company are subject to certain risks, including, among others, future demand for its products, competition from other businesses providing similar products, the ability to maintain profitability and control expenses and the Companys ability to successfully execute its business strategy. These and other risks and uncertainties are discussed in more detail in the Companys periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, which are available at the SEC website at www.sec.gov.

JONES SODA CO.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited – $US)

     

 

 Three Months Ended

June 30,

 Six Months Ended

June 30,

  2007 2006 2007 2006
         
Revenue $13,012,473 $10,025,978 $22,200,512 $18,786,358
         
Cost of Goods Sold 8,563,343 6,219,655 14,235,221 11,860,365
         
Gross Profit 4,449,130 3,806,323 7,965,291 6,925,993
         
Gross Margin 34.2% 38.0% 35.9% 36.9%
         
Licensing Revenue 47,797 146,481 193,743 284,052

 

        
Operating Expenses(1):        
Promotion and Selling 3,474,142 1,992,670 5,832,863 4,107,493
General & Admin. 1,526,638 1,124,430 3,257,808 2,222,016

 

 5,000,780 3,117,100 9,090,671 6,329,509

Earnings (loss) before interest & taxes

 (503,853) 835,704 (931,637) 880,536
Interest income, net 416,269 100,637 857,356 113,347
Earnings (loss) before income taxes (87,584) 936,341 (74,281) 993,883
Income tax benefit (expense)        
Current (150,587) (105,480) (146,860) (160,480)
Deferred 278,897 1,482,934 320,180 1,482,934
Earnings for the period 40,726 2,313,795 99,039 2,316,337
         
Earnings per share:        
Basic $0.00 $0.10 $0.00 $0.10
Diluted $0.00 $0.10 $0.00 $0.10
         
Weighted average number of common stock:      
Basic 25,771,972 22,891,891 25,782,275 22,321,479
Diluted 26,385,734 22,991,489 26,311,619 23,324,830
         
(1) Includes non-cash stock based compensation:        
Promotion and selling $131,084 $102,530 $199,088 $218,540
General and administrative $194,334 $150,195 $334,230 $420,888

JONES SODA CO.

CONSOLIDATED BALANCE SHEET

($US)

     
 

 

June 30, 2007 Dec. 31, 2006
  (unaudited)
ASSETS    
     
Current Assets:    
Cash and equivalents $15,167,271 $13,905,870
Short-term investments 15,374,969 16,318,510
Accounts receivable 5,835,458 6,914,422
Inventory 7,865,433 5,783,067
Deferred income tax asset 1,520,000 1,507,145
Prepaid expenses 1,926,952 712,690
  47,690,083 45,141,704
Deferred income tax asset 

3,714,719

 427,993
Capital assets 1,580,573 756,618
Other assets 1,277,259 1,414,138
Intangible assets 186,923 211,931
  

$54,449,557

 $47,952,384
     
LIABILITIES AND SHAREHOLDERS EQUITY  
     
Current Liabilities:    
Accounts payable and accrued liabilities $6,746,362 $5,446,953
Current portion of capital lease obligations 169,279 70,471
Taxes payable 3,010 150,141
  6,918,651 5,667,565
Capital lease obligations less current portion 544,436 15,329
Shareholders equity 

46,986,470

 42,269,490
  

$54,449,557

 $47,952,384

JONES SODA CO.

CONSOLIDATED STATEMENT OF CASH FLOWS

($US)

     
 

 

Six months ended

June 30, 2007

 

Six months ended

June 30, 2006

  (unaudited) (unaudited)
Cash flows from(used in) operating activities :    
Earnings for the period $

99,039

 $2,316,337
Items not involving cash:    
Depreciation and amortization  

288,728

  118,983
Deferred income taxes  (320,180)  (1,482,934)
Stock based compensation  533,318  639,428
Change in assets and liabilities    
Accounts receivable  1,078,964  (1,079,943)
Inventory  (2,082,366)  154,665
Prepaid expenses  (1,214,262)  (313,274)
Taxes payable  (147,131)  143,472
Accounts payable and accrued liabilities  1,299,409  859,973
Net cash from (used in) operating activities  (464,481)  1,356,707
     
     
Cash flows from (used in) investing activities:    
Sale of short-term investments  938,770  
Purchase of capital assets  (438,625)  (177,009)
Purchase of intangible assets    (160,027)
Purchase of other assets    
Net cash from in investing activities  500,145  (337,036)
     
Cash flows from financing activities:    
Repayment of capital lease obligations  (44,823)  (59,193)
Proceeds from capital lease obligations  160,569  
Net proceeds from PIPE    28,113,000
Proceeds from exercise of options  1,109,991  688,065
Net cash from financing activities  1,225,737  28,741,872
Net increase in cash and cash equivalents  1,261,401  29,761,543
Cash and cash equivalents, beginning of period  13,905,870  1,176,101
Cash and cash equivalents, end of period $15,167,271 $30,937,644
Supplemental Disclosure of Non-cash financing activities    
Acquisition of fixed assets $512,168  

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